Asia MEK stable amid wide buy-sell gap, limited supply

SINGAPORE (ICIS)–Spot methyl ethyl ketone (MEK) prices in Asia were assessed steady, with only a few deals done last week as the gap between buying and selling ideas for end-August and early September shipments remaining wide, market sources said on Monday.

On 22 August, MEK prices were assessed at $1,490-1,515/tonne CFR (cost and freight) NE (northeast) Asia and at $1,520-1,550/tonne CFR SE Asia, unchanged from the previous weeks, according to ICIS data.

Most northeast Asian producers maintained firm offers for end-August and early September shipments, with limited availability across the region.

Supply from Japan remained limited because of scheduled turnarounds at multiple facilities in September and October.

Consequently, offers to the key export market of South Korea remained few, and capped at $1,515/tonne CFR South Korea, as producers opted to build inventories ahead of the turnarounds and largely focussed on domestic demand.

However, bids from Korean importers remained low owing to seasonally weak demand in the country during summer, and with just a few buying ideas heard. Buying quotes were capped at $1,500/tonne CFR South Korea or lower.

Ample inventories in the Korean domestic markets also deterred most buyers from booking shipments.

Moreover, traders preferred to remain on the sidelines, citing weak margins between import and domestic prices.

MEK availability in China was also deemed limited, with one facility of a regional producer down for maintenance from 16 August to 1 October, market sources said.

Furthermore, an explosion at a nearby storage site in China in early August affected the warehouse operations of an MEK facility of a another producer. The plant itself, however, was not affected by the blast.

Consequently, Chinese producers were offering $1,500-1,520/tonne FOB (free on board) China offers for end-August and September shipments but were met with subdued buying interest, market sources said.

The selling prices were equivalent to $1,520-1,540/tonne CFR South Korea and $1,550-1,570/tonne CFR SE Asia, they said.

Bids from Korean importers were few and capped at $1,480/tonne FOB China or $1,500/tonne CFR South Korea, while those in southeast Asia were kept at $1,520/tonne CFR SE Asia. A gap in buy-sell ideas hampered trade.

Producers across Asia, on the other hand, have maintained their offers, expecting demand to improve and support prices when summer ends in South Korea next month.

MEK is a solvent widely used in the manufacture of industrial paints, coatings and printing inks.

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections